China’s ARJ21 should scare Boeing and Airbus

With its Antonov wing, 2000s-era General Electric engines and a re-purposed McDonnell Douglas fuselage, Comac’s ARJ21-700 isn’t a head-to-head competitor with Brazilian, Canadian or Japanese regional jet designs.

But that doesn’t really matter.

With little fanfare in 2016, a quartet of Chinese firms bought four companies that specialize in factory automation and robotic assembly: Kuka AG and Broetje-Automation of Germany, Valiant Machine & Tool of Canada and Aritex of Spain. All four are now wholly- or mostly-owned by Midea Group, Shanghai Electric, Hubei Huachangda Intelligent Equipment and AVIC, respectively.

(Notably, Kuka North America, which helped design the Fuselage Automated Upright Build (FUAB) assembly line for the 777 and 777X, was split from its parent as part of the Midea transaction and sold to Advanced Integration Technologies)

The Center for Strategic & International Studies identified ten strategic sectors as part of its Made in China 2025 analysis that the nation believes are central to its ascent as an advanced economy. ‘Automated machine tools & robotics’ and ‘Aerospace and aeronautical equipment’ are numbers three and four on that list.

The Western View

A December 2016 report on the ARJ21 from The Teal Group encapsulates the less-than-optimistic Western view on Comac’s first jetliner in service:

…uncertainty about funding, coupled with the dismal order book and doubts about the wisdom of this project, and looking at China’s mediocre aircraft production track record, and on top of these the serious technical problems that have plagued this program, lead us to question whether this aircraft will enter series production.

While it glacially (by Western standards) produces the first batch of ARJ21s on its primary Dachang assembly line, Comac is standing up a second facility at Pudong by 2019 with the Shanghai Aircraft Manufacturing Co. Ltd.

But the line isn’t a duplication of the capabilities of the first.

“It’s an R&D testing ground for proving out concepts” for automated manufacturing that will eventually mature for the C919 and CR929, concludes David Pritchard, Associate Professor of Business and aviation Researcher at SUNY Empire State College in Buffalo, New York. Pritchard worked in aviation manufacturing development and assembly automation for two decades.

And Comac’s plans bolster that assessment. A detailed presentation about the establishment of the second Pudong assembly line – reviewed by this page – focuses heavily on increasing the automated assembly of the ARJ21. Employing technologies like flexible rail drilling machines, load-transferring AGV drilling systems and other robotic drilling arms are all slated be at the center of manufacturing.

The goal is to increase output capacity to as many as 45 airplanes per year, including 30 from Pudong. Boeing and Airbus individually produce more than that many 737s or A320s each month, but “at the end of the day it’s a learning project,” said Pritchard.

AlixPartners, a management consultancy with a focus on aerospace and defence, posits that over time that automation in Chinese factories for the C919 won’t play a significant role in matching western competitiveness.

Instead, it believes China’s will reach parity by 2027 with Boeing and Airbus through a combination of repetitive learning curve and hourly cost advantage.

But with Kuka, Broetje, Valiant and Aritex – and the ARJ21’s technology crucible – now firmly established as part of the Chinese industrial ecosystem, is it time to revisit those assumptions?

Comments

Thomas Lee

What is the total “China Content” of this design as well as the C919? Is it just Boeing and Airbus that should be concerned, or will GE, UTC, Rockwell, and other Western suppliers be designed out of future China aircraft with locally designed and built engines and systems? Is there a move by the Chinese government to acquire US and European engine and systems suppliers?

From what I heard and what I could still remember (may not entirely accurate) for C919. Initially about 50% of it, parts and whatnot, is produced by the Chinese. The goal is to get it up to 80 something % or higher in 20 years or so. That % number can be important. And the engine is crucial too. I don’t believe the Chinese is going to buy companies producing engines, because they know the gov’t of those countries wouldn’t allow such deals. Their goal is to produce engines by themselves one day,

As Delta has shown, it’s not necessary to always be working with latest-gen aircraft in order to turn a profit. If the ARJ-21 can become a reliable workhorse, produced en-mass at a fraction of western equivalents, it becomes more than just a learning project. It could scoop out the bottom of the rapidly expanding Chinese market from other OEMs.

China has twelve-year economic plans that remain largely uninterrupted by political changes, such rotation of the presidency. Recently, the Communist party there was looking at removing the two-term presidency cap, which would give the current incumbent even more policy certainty. In the West, NASA’s apparent lack of focus on human space flight, as explained in a recent Business Insider {Tech Insider} video, is a template for Western short-termism. The West is Blue, and China is Red, per Piepenbrock.

China funds this is also fascinating. According to the China Business Review, the largest group of US exports to China are raw materials, with soy beans the largest item. It is true that American innovation has allowed the country to become something of a breadbasket for the world, with farming accounting for a very low single digit percentage of the overall American economy and also a very low percentage of American employment. Chinese exports are lead by manufactured goods, and even though many of those goods are designed by Americans, Europeans, Japanese and South Koreans, and so on, Chinese have had important hands on the manufacturing, and thus the design. The Chinese are earning their wage, and they’re spending it long.

The acquisition of those four foreign hotbeds of expertise together with China’s very slow airliner developments point to the simple fact the the country is playing a very long game here.

The ARJ-21 & C919 will be resounding successes, in terms of technical and logistical learning curves. All China needs to do is remain on course.

Paulo,
You hit the nail on the head. The steadiness of the strategy is a marked contrast to Western aim, especially those in the U.S.. What I think we’re really seeing here – which is the root of Piepenbrock and Red-Blue – is that the Chinese are heavily optimizing process with this strategy, not product. And they’ve got an ecosystem that will be able to share the learning once they’ve gained it by doing it themselves. The jetliners themselves are commodities, the question is in a faster, better, cheaper world, can they achieve both faster (i.e. speedy output and time to market) and better (i.e. equal or better reliability) than their competition in the U.S., Canada, Brazil and Europe.

If the MoM gap is attacked with gusto by new product the the ME3 are their clones are going to be under pressure. The ME3 have a balanced Aggregator / Distributor Business Model. Hub and Spoke arrangement where both sides are in balance. Any MoM’ster with a 5K / 6K NM range allows one side of the ME3 route map to fly to the other side directly without a detour to somewhere hot and sandy. Glesga / Pudong example = 11/12 hours direct vs 16/17 hours via the Persian Gulf. Economics are all positive — less time in the air. 55T/ 65T or 75T of OEW instead of 155T / 175T or 275T. Smaller cities link up with each other. The B787 was hype but the B797 should be the real deal.

With the Chinese instruments snapping up lessors as well, most notably Bohai-Avolon-CIT, IDB Leasing, ICBC Leasing, and BOC Aviation, the time has also come for the Chinese authorities to demand their enterprises buy Chinese. Starting with every 10 airframes purchased for leasing and 3 being Chinese-made now, to 5 out of every 10 in the future, perhaps even 7 out of every 10, it will snowball.

But the market will then have to deal with prospective airline customers with leased Chinese aircraft grounded without the necessary aftermarket support (engineering, AOG, parts, and documentation).

Certainly an issue and those companies should never be allowed to be sold to China.

TM is wrong though in what Delta does. The aircraft it bought were reasonably economical with a built in support system. They also were dirt cheap.

ARJ and the 919 are not competitive no matter how fast build they are or even their cost.

It also has to do with support.

China can and is forcing these aircraft on the internal market, they won’t be competitive out of China and likely as the government owns them, they will just get parked or run on token/equal internal China routes that they all have to run.

What about the independents? If they have to go heads up with those then it changes the dynamic.

How independent are they?

On a side note: Saw a BBD CS300 come through Anchorages on the way to Korea (KA)

That is one great looking aircraft, no wonder Boeing is running scared!